See gap of 2-3 days without inventory; material shipments arriving by sea, says Granules India

India has restricted the export of 12 essential active pharmaceutical ingredients (API) along with other drug formulations to ensure there is no shortage of drugs in wake of Coronavirus concerns.

Talking about the impact of this development, Krishna Prasad Chigurupati, chairman and managing director, Granules India told CNBC-TV18 that there is only a restriction and not a ban, so there would be a little delay in shipments.

"We just have to apply to the Directorate General of Foreign Trade (DGFT) for permissions and then they would give us permission to export based on past exports. In the worst case, may be some of the shipments from this month may spill over to next month. Otherwise, two quarters put together I don’t see any big impact and life should be as normal,” he stated.

“Most of the intermediates or the raw materials come from China. For example with regards to Paracetamol - the key intermediate comes from China and there has been a disruption or delay for about a week. Otherwise life is normal, shipments are happening regularly and there is no disruption in manufacturing of Paracetamol.

Giving details on current inventory situation he said, “We have inventory for another 10 days but materials are arriving. So, there could be a gap of about of 2-3 days without inventory but the shipments are  already on the water and we should be getting them by next week. So, I don’t see any issue on inventories as well.”

Talking about impact of this on Q4 revenues Prasad said, “It all depends on how quickly the government acts on awarding permission to exports so there could possibly be little spill over in to the next quarter. There could be a little fall in this quarter which will be made up in the next quarter.”

Speaking about pressure on prices because of airlifting of products he said, “Airlifting of some products is happening. Air freights have gone up, the prices have gone up and there could be an increase in cost of raw materials. But as far as our products are concerned there is absolutely no issue, everything is coming by sea.” So, I don’t see any impact on margins, he added.

With regards to supplies, he said, “We supply APIs to Indian companies, Paracetamol especially, but formulations is all for exports. We never sell any formulations within India.”